News Release

January 23, 2002

Government Spending Upsurge Started Before 9/11—New CBO Numbers Show Projected Federal Spending Will Rise 31 Percent by FY 2004

WASHINGTON – New budget projections released today by the Congressional Budget Office (CBO) show that the discretionary spending baseline has taken another large upward jump. Discretionary spending includes defense and non-defense spending that is annually appropriated.

Examining CBO's past projections for discretionary spending for fiscal years 2003 to 2007, Cato's Director of Fiscal Policy, Chris Edwards, found an alarming trend of upward revisions.

"In January 1999, CBO projected that if spending rose each year by the inflation rate, then FY 2003 outlays would be $583 billion. The CBO now says FY 2003 spending will be $764 billion, a 31 percent upward revision in just 3 years. Since CBO's baseline already factors in inflation, these increases reflect a large expansion of real resources poured into federal spending." See Chart.

"The cumulative effect of the rising baseline has been huge," said Edwards. "If Congress had been able to restrain FY 2003-2007 spending to levels projected in 1999, it would now have $950 billion more available to cut taxes during the next 5 years. That would be more than enough to accelerate to 2002 all future phased-in tax cuts under the Bush tax plan and pay down large amounts of federal debt.

"While Congress did show some spending restraint in the mid-1990s, the new baseline numbers show that discretionary spending growth will average at least 6.6 percent annually between FY 1998 and 2003. With spending in entitlement programs, including Social Security and Medicare, expected to explode in future years, taxpayers simply cannot afford such profligacy in discretionary spending."